this week, the endgame. >> our country is not going to default for the first time in history. that is not going to happen. >> now, at the 11th hour, perhaps some cause for optimism. >> there are negotiations going on at the white house now. on a solution that will avert a catastrophic default. >> with the whole world watching the president faces his toughest challenge yet. >he time for r puttinparty first is over. >> abc's chief political correspondent george stephanopoulos joins us for the inside story and the very latest as the crisis nears a climax. the president's top political adviser, david plouffe, on hand with a few from the white house, and then, tea party congress at a crossroads. >> it's unfair, it's bizarro.

>> republican senator lindsey graham on the search for consensus within his own party. also, from norway to ft. hood. extremism is back in the headlines. new york city police commissioner ray kelly on the very real threat posed by radicals. and we'll take you to mogadishu, somalia, where abc's david muir is the first correspondent on the ground, reporting on the country's epic famine. >> announcer: live from the newseum in washington, "this week with christiane amanpour" starts right now. welcome to the program. lots to get to today, but first, some news since your morning papers. we have new developments to report on the story dominate all others and that's the flurry of last-minute talks to raise the debtbteiling before the country runs out of money to pay its bills. and this morning, we're hearing there is a framework of a deal being worked on, but it's fragile. and you can see the clock ticking down to the tuesday deadline. already, we're seeing signs of mounting concern on wall street.

the stock market plunged more than 500 points in the last week. a loss of $700 billion, , just over 4% of its value. but this morning, a glimmer of hope, perhaps. for the very latest i'm joined by abc chief political correspondent george stephanopoulos. george, you've been talking to all your sources. are wewet the edge or pulling back from the edge? >> think we're seeing the beginnings of the endgame. it's good to be back on "this week." this is the framework, not a final deal at all. but designed to get each side the bottom line. the president gets the debt ceiling through the election, about $2.4 trillion. the republicans get the debt reduction spending cut that meets that $2.4 trillion. here's how it would work. a trillion dollars in spending cuts righthtow. then a special congressional committee set up designed to report by about thanksgiving to come up with another trillion or so dollars in spending cuts, maybe a little more than that.

the rub is on. what happens if this congressional committee doesn't get that $1.4 trillion in deficit reduction? they are working on what they call a trigger that guarantees spending cuts in defense and domestic programs if this meet the goal.committee doesn't now, the question would be, does that trigger also include revenue? congressional sources saying no, does it guarantee automatic spending cuts? congressional sources saying yes. the white house saying they don't agree with that yet. that's why we have david plouffe the senior adviser to clear that up for us this morning. >> indeed. joining us, david plouffe, the senior adviser to president obama. you've heard all we've been talking about. is there a deal? >> no, there's not. >> is there a deal close, a framework? what can you tell us? >> well, i unfortunately can't negotiate here on your program. i think what is clear is pretty much both parties agree that there's going to be a first stage of deficit reduction over a trillion dollars.

that there's a process, as george talked about, a congressional committee. what that's going to work on, the items the president is focusing on with speaker boehner, you won't reduce the deficit without title reform. >> that committee reduces debt increases, the committee, not the trigger. >> any long-term deficit reduction. i think the american people have spoken clearly about this too if you're a middle class family, a senior citizen, you're furious that the answer by some in washington, mainly republicans in the house, is to ask you to do everything. you have to have closing of tax loopholes, and revenue to close the deficit. there is, without getting into details, one of the things we're focused on. this was prt of the president's debt reduction that he outlined in the spring, an enforcement mechanism. if this committee doesn't act -- i would start by saying, i think it's incumbent to appoint people to this committee focused on debt reduction, willing to get out of their party's comfort zone. so you can produce something

that can get voted on. but enforcement mechanism. so the committee doesn't act, if it deadlocks, let there be additional deficititeduction. that's obviously one of the areas that's under discussion. >> so, do you now think, as this is being worked on, do you think after all this tension and stress between the parties, that there will be something that both parties can get all their members, the majority to vote on? >> well, we still have some hard work to do. but it would be inconceivable that we don't. the american people, you flashed the stock market decline this week. it's clear it's hurting consumer confidence, business confidence. we have to remove this. the debt ceiling has been raised dozens of times over the last couple decades. it has t tbe raised again. again, let's remember what we're talking about here. these are bills congress put on the credit card. they are required to pay for them. we all agree, if you're an american citizen, you should be pleased by this. there's this unanimity we need to stop putting as much spending on the credit card. the debate we're having is how do we reduce the deficit?

i think all of the leaders had said privately and publicly that the united states of america will not default. >> will it happen by the deadline, august 2nd deadline? >> that's the deadline. our borrowing authority runs out. >> no short-term extensisis? a few days? >> what we said and some on congress said, if you have a deal and needed a day or two to dot the is and cross the ts but there's no reason to do that. we have to get this done by tuesday. it's inconceivable for the united states of america, the impact that we have not only on people here in this countrtr most importantly, but around the world would be catastrophic. >> let me press you on the details. the details of this mechanism are all important. this is what the whole negotiation is coming down to. right now, the president said time and time again, he wants a balanced approach that includes tax reform revenue increases. everyone i talked to on capitol hill said this enforcement mechanism would not include revenue increases, would be just acrosssshe board spending cuts. domestic spending, medicare, perhaps and defense and would

not include revenues. so if f e enforcement mechanism doesn't include revenues, what incentive would republicans have to consider revenue increases and wouldn't it all but guarantee the final product is all spending cuts and not the balanced approach the president wants? >> i will. first of all, i think the committee is going to be charged with finding significant deficit reduction. i think there's a lot of focus on that committee, certainly the work the president did with the speaker, is going to inform that committee. i think the american people spoke clearly that they want a balanced approach that asks something of everybody. whatever enforcement mechanism put in place, has to be strong enough to compel action. whwhever its composition, people shououldn't look at this enforcement mechanism. at least from my viewpoint, you should assume that's going to happen, because what you want, historically there's been enforcement mechanisms strong enough to compel action. back in 1990, the first president bush, there was a looming trigger that people wanted to make sure didn't get >> you're talking revenue

increases. now you're talking about one that does not include revenue increases. isn't that the problem? >> listen, we're talking about a variety of options here. the key principle is that the enforcement mechanism has to be strong enough to compel both parties. >> let me just press this. can the president accept an enforcement mechanism that's spending cuts only, automatic spending cuts that does not include revenues? >> what i would say, we would accept an enforcement mechanism that compels both parties to action and also is something that we think substantively is acceptable to your country. >> you're saying there may be a way to compel action without including revenues? >> again, we're talking about a variety of different options here in the closing hours here about how to compel that action. i would say the positive thing is, i think both parties agree, that you need such an action. and exactly what the composition is. again, we want to make sure

there's focus on this committee acting. i think this has been a healthy debate. the american people understand a lot more about the deficit, about there's no easy answers, it's been a healthy debate here in washington. and i think any long-term deficit reduction will include revenues, and smart entitlement reform. republicans don't agree with that. >> well, some republicans do. first of all, i would say most republicans in america do, and you begin to see a republican senator speak to this, that, listen, we had a deal with speaker boehner that obviously fell apart that included $800 billion in revenue. i'm confident any solution that this committee would produce that ultimately is voted on n congress is a balance. >> frustrated members of your own party, they are saying, look, why doesn't the president who has his principle stand up for them, rather than spending so much time wanting to be bi-partisan, a conciliator.. they are saying the republicans are driving a harder bargain. as george described, the president proved all of the way to the language and the ideals that the republicans espoused. >> if you look at -- yes, because he wanted a clean bill,

then a bill with cuts on spending and as george is talking about, it's all cuts for the moment. >> first of all, we've been clear, we need this debt ceiling increased well into the future. the spectacle in washington, this week, anyone who thinks we should repeat this a few months down the road. i don't think there's enough people in america. first of all we need a longer term extension, because our economy cannot have this cloud over it. secondly, deficit reduction will happen in two stages. there's a first stage that has cuts agreed to. largely that came out of the work the president and vice president did. acceptable to largely members of both parties. the second stage is a committee looking into the tougher issues of entitlement reform and tax reform. the president believes we need to reduce the deficit. this isn't playing on a republican playing field. this country, our economy, has to reduce the deficit. we have to live within our means.

if you're oppressive, there's a powerful place for them. college loan, spending of roads and bridges that put construction workers to work. if we don't reduce the deficit in the not to distant future, we're not going to have room to do any of that. we have to live within our means. the president is clear he's willing to do tough things. only way to do that is get out of your comfort design. you won't do it without smart entitlement reform. but you'll also not do it without significant tax reform. >> you keep saying significant entitlement reform. does that include medicare cuts? is medicare cuts back on the tabt as part of the congressional committee's mandate and as part of the enforcement mechanisms mandate? >> again, there's various enforcement mechanisms that have different consequences. in the initial spending cuts these are domestic spending cuts, both defense and nondefense. the commitite's charge then, before we get the enforcement mechanism. the details.ill in the rest of the truth is, we will have cut a lot of domestic spending. so there won't be much room there. >> drives you to medicare and medicaid and social security. >> and tax reform. the president is clear, he laid

out -- he was willing to do medicare reform. oir view on this is, if we can strengthen medicare, strengthen social security, as opposed to what the house republicans wanted to do, which is largely to dismantle it. >> we keep talking about tax reform which is seen all week long. there are not votes in the house of representatives for the kind of package you're talking about. >> it's hard to get a majority of house republicans to even support their own plan. here's what i'm convnvced. the shame is, if the quote, unquote, grand bargain the president is working with the speaker on. i'm convinced, had that come it would have been the easiest to get the votes for. because it would have been deficit reduction on such a grand scale, that even though there was component parts in it that are really tough political votes, people would have been able to accept it. we'll do it in two stages. ultimately we need the same outcome. significant deficit reduction, $3 trillion, $4 trillion over ten years, really reduced the deficit in the years after that, and it's got to be done in a balanced way. >> you keep saying, it has to be done.

if it's not, what is the administration going to do? i mean, the specter of u.s. soldiers fighting for this country in afghanistan, asking their commander if they are going to get paid, it's really shameful. >> yes. >> what are the choices that are going to be made if this doesn't come through as you hope? >> well, it's really unthinkable. i think the scepter you raised is one of the reasons i think there's so much urgency on capitol hill this morning. >> what are the tough choices and what will be paid? >> first of all, our focus now is on solving this. you know, we don't have much time left. a little over 60 hours, i guess. we've got to get this solved. >> and, you know, at the last hours, people are looking for off ramps. there is no off ramp here. the only option for congress to raise the debt ceiling and sign the initial deficit reduction savings into law. obviously, if congress isn't able to act, the treasury department has to brief people affected and will obviouslsldo that. the focus has to be driving toward some conclusion.

i think the american people are gone through this recession, many lost jobs, many working two jobs, they are helping family members who have been affected. they are furious at this. what they are screaming -- the president a couple times talked about compromise. capitol hill was besieged by tweets, by calls, by e-mails. the american people are fed up. they want their leaders to lead and part of leading is compromise. you know, george, you worked on capitol hill, any meaningful agreement has to be based on compromise, particularly when you have divided government. the american people chose divided government in 2010 but they did not choose dysfunctional government. i think the spectacle this week has been something that enraged americans, and i think they'll insist their leaders over the next two and a half days, solve this problem. >> we'll certainly be watching it. david plouffe, thank you very much indeed. again, capitol hill becomes a hive of activity this afternoon when senator majority leader henry reid brings his troops in session. we'll begin to see how the rank and file responds to

negotiations. we're now w ined by lindsey graham of south carolina. thanks for joining us. >> thank you. >> as all of this goes on we're hearing from minority leader mitch mcconnell that they are working, close to o e parameters, close to presenting something to their members. is this what you're hearing? the kind of thing you get on board on? >> that was actually a pretty good interview. i don't know where i'm going to land but i do believe there is a desire as a whole to get this done in a way you don't go into tuesday with a default. there's a lot of history being made here. the average debt ceiling in terms of time since 1940 has been 20 minutes. we'll do 20 months since the proposal. from the republican party's point of view, i think we can declare victory in a limited fashion. this is the first time, in my lifetime, that i know of, we're paying for future debt increases dollar for dollar. that would not happen since the 2010 election.

which is about the size and scope of the government. when you tell tea party folks, quite frankly people like me, that we've won, wait a minute. we've changed the culture in terms of raising the debt ceiling but in the next decade, adding $6 trillion to $7 trillion additional money to the debt. the government continues to grow. i think what we've been able to achieve is historic in terms of the debt ceiling debate. but we're not -- we're no longer running toward oblivion, we're walking to it and we have to stop and turn around and go back the other way. >> every republican congressman from your own state voted against speaker boehner's plan, even though it had the balanced budget amendment. do you think they'll get behind this current -- >> i don't see many conservatives getting behind this. i learned in politic, don't oversell, don't tell people they should feel good when they have a reason n n to feel that great. >> will it pass?

will enough get behind it? >> i think half the conference in the republican house must vote for this. to president obama -- >> only half? because i like john boehner, . maybe he can get more, but it's a $3 trillion package that will allow $7 trillion to be added to the debt over the next decade. so how much celebrating can you do about that? >> in order to get something like this, it does not include revenue increases. >> that is a win. >> that is a win. it would only get half? >> my belief is, what do i tell people at home? what did you do about getting us out of debt? i slowed down how much debt you add. instead of adding 10 trillion, wewel add 7. i slowed down the growth of government but it still grows every year. for those who came out and voted in 2010, and said get the size of scope of washington and change the new direction. it doesn't go in the new direction. >> only half the republican this could go down. >> our democratic friends

provided no votes to john. harry reid's plan is going nowhere. >> you said there's no plans, he moved so far, entirely to your side. >> his rhetoric -- theheeason everybody moved -- >> the whole spending cut. >> let me tell you, there's people in my party who are really not that excited about cutting -- >> you're not ready to vote for this, are you? >> from a big picture, i'm not ready to vote for this. let me tell you why -- excuse me, george, the bottom line here is, the people who got elected are not excited about being republicans or democrats, they are excited about results. and it is fair to say, we've achieved significant change in the way washington works by paying for the debt ceiling increase and not passing it on to the credit card. we have not achieved entitlement change. we've not reduced the size and scope of government. we're going in the wrong direction at a slower pace and for a lot of people that is not winning. >> you're an internationalist. we talked about all sorts of

things like afghanistan. other such places. you saw the soldiers yesterday and i asked david plouffe, desperately asking their commander, admiral mullin, whether they will get paid. and he said i can't tell you. >> i can. i can tell them. here's what i would have said, i would have said, not only are you going to get paid. admiral mullin said the number one national security issue facing this s untry is debt. and i wish we would have followed on with what we said. if you believe we're so far in debt, we'll become a weak country and can't afford to defend ourselves, i would have told the marines, you are going to get paid but, by god, change the reason your children don't have the american dream. young man, we'll pay you, but we'll change washington so your country doesn't become weak and ineffective and have more debt than your children can afford to pay. that's what i would have told them. >> you must also worry about the way the world is seeing this country right now. i mean -- >> i'm not worried about democracy.

>> they say a political system -- >> you have people in this country who just won a big election. they weren't kidding when they said they wanted to come to washington to change the size and scope of government. then you have people saying, you don't understand, you don't get it. well, let me tell you, i do understand. 43 cents on every dollar being borrowed, medicare and social security will fail, so what i would tell anybody around the world. thank god these new people are here, because do you want america to become greece? do you want our debt instruments not to be well received throughout the country? do you want us holding our debt, never to turn around while in debt the 14.3 trillion? this deal and it is better than a lot of people thought, but not nearly where the problem is. >> senator, on that note, thank you very much indeed for joining us. >> thank you. >> coming up, our "roundtable" on the emerging framework, the deal and the big question, can it hold? we'll take off where senator lindsey graham just left off. the stakes couldn't be higher for this country, and the obama

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i stuck my neck out a mile to try to get in agreement with the president of the united states. i stuck my neck out a mile. >> house speaker john boehner on friday night. a taste of the intensity that defined the final hours of the debt ceiling debate. the speaker weathered some tough challenge this week. now he faces a new test. whatever deal he works out between the senate and president will have to pass muster in the house. a lot of twists and turn still to come. joining me to chart the course, george will. pulitzer prize winner, paul krugman also a columnist for "the new york times." grover norquist, preredent of the american tax reform. a group that played a major role in this debate and one again, abc chief political correspondent george stephanopoulos. gentlemen, you just heard what senator lindsey graham said, what david plouffe, the president's adviser said. mitch mcconnell saying they are

quite close, that he'll have the parameters of framework to show to his members today. is this now going to pass? are we going to get a deal? >> i think we are. i think it was signalled when the president spoke last monday. that's six days ago, seems like six months ago. what he said it was unjust, unacceptable to have a debt ceiling agreement that does not include revenues, that is unbalanced. the president said that after the second most prominent and powerful democrat in washington, harry reid proposed exactly that. not only proposed that. but an increase of revenue, but increase that had the other main republican component, which was spending cuts commensurate with the debt ceiling. >> it's a win? >> it is a win. the conservatives are saying it's imperfect, to which i say the sistine chapel ceiling is in some case imperfect. >> i don't know, is michelangelo

imperfect? is this imperfect for you, or enough for you to get your people behind? >> it has the two biggest challenges, everybody going back to 1982 and 1990. it doesn't have a tax increase in it. it appears to have real spending restraint with mechanisms to enforce it, as opposed to what happened in the past where we had the tax increase without spending restraint. by missing those two, it moves in the right direction. would i like to see more spending reductions? absolutely. are we moving in the correct direction? yeah. >> george we've been talking to senator graham and david plouffe. senator graham seemed to say it didn't go far enough and he wouldn't vote for it. >> said it was historic and thank you r victory in a limited sense, but won't be voting for it. take a step back. you go back since the majority was elected. since then, the bush tax cuts extended. they got $30 million in the spring, going to $2.4 trillion now without any revenue increases the president has called for.

you talk to people in speaker boehner's house, this is a big, big win. i don't know how you can deny it at this point. >> first thing, you shouldn't from the perspective of a ration al person, we shouldn't be talking about spending cuts at l now. we had 9% unemployment. these spending cuts are going to worsen unemployment. it's even going to hold the long-run fiscal picture. we have a situation where more and more people are becoming long-term unemployed. if you have a situation that permanently raises the unemployment rate. which is what this is going to do, that's actually going to reduce future revenues. the spending cuts are going to hurt the long-run fiscal situation. then on top of that. budget cuts that are entirely -- basically the p they well blow up the world economy unless you give us what you want and the president says, okay. that's what happens. >> you've been consistent when

you said there should be no gets at a time of recession and weak recovery. what is your scenario once this goes through and there's significant spending cuts and no revenues. >> we're looking. we used to talk about the japanese and lost decade. we'll look at them as a role model. they did better than we're doing. this is going to go on. i have nobody i know who thinks the unemployment rate will be below 8% at the end of next year. with the spending cuts it might be above 9%. there is no light at the end of this tunnel. we're having a debate in washington, all about, gee, we'll make the economy worse, but will we make it worse 90% republicans terms or 100% republicans terms? the answer is 100%. >> paul's right. we're a third of the way of the lost decade. but we're a third of the way after t.a.r.p., the stimulus, cash for clunkers, dollars for dishwashers, the entire range of stimulus which simply hasn't worked. >> in advance. one important point to make is

there e e people like me said in advance this wasn't remotely big enough. it's not an after the fact. it's not coming back afterwards. right from the beginning, i looked at the numbers, people like me look at the numbers, we'll have huge cutbacks at state and local level. a federal increase barely enough to limit those cutbacks. there will be nonoet fiscal stimulus, look at government as the whole which is what happens. here we are. >> good to go to the electorate and have a krugman election this time, saying, resolved, the government is too frugal, let's vote. >> president obama has been eply involved over the last, you know, several days. last 48 hours for sure. but it's been a very rough week, george. how is this going to pan out? >> rough few months. first of all, the president needed the deal. he bears the consequences of default more than anyone else. even if the public blames the republicans more for what happened. he has to deal with what happened in the economy. i think at this point, the white house is hoping by getting a deal, he can start to right the

ship. you look at what's happening with the polling of the president's approval rating. the gallup poll has them to 40%. you and i were talking about before we came on air, has him barely beating a generic republican, 41-40. it's taken a real toll on the president's position. >> we've also haha50 states that sort of played this out as well. in the last couple of years, they've not raised taxes, places like new jersey, wisconsin, michigan, hoyle, pennsylvania, major states, texas, florida, what they've done is reined in spending. the states that reduced spending and not raised taxes are doing better than the states like illinois, and connecticut which are trying to raise taxes. >> is that right, paul? >> no, it's not. we c c get into statistics but we'll get too deep. it's just not true. let me say on the politics, look at polling, turns out the average republican voter thinks

there should be some revenue as part of this deal. the president has agreed not to just an agreement way to the right of the average american voter. it's actually to the right of the average republican voter wants. >> he's fought here, he simply doesn't have the vote. >> he has options. there are -- i'm aware of at least four possible legal routes -- >> 14th amendment, article 1, platinum coin. people know about the platinum coin issue. >> a trillion dollars each. >> which is ridiculous. the whole debate is ridiculous, right? you have somebody holding the american economy hostage. and trying to export policy concessions that they could never actually pass through congress and never get past the voter, you go forward, or whatever you canano to stop it. >> only them the president could have done something is go back in december when republicans are calling for an extension of bush tax cuts. he could have caused for extension of the debt limit. it might not have worked but when he had the most leverage. >> that is an important

question. there's nothing legally, constitutionally, any way that binds the debt ceiling to the budget. why didn't he take a stronger stance in saying, these are two separate issues. >> it's what we ask on everything, right? why have the president unwilling -- you know -- >> george, he could have done it, right? >> he always signals -- >> he begins every negotiation by signaling, i'm willing to move halfway. so the other side moves further. he moves halfway. he's never -- >> he paid attention to the 2010 election. he noticed what happened. i don't think the president -- we know the president wasn't willing to stand up and say, i don't care about overspending, i just want to let you borrow more money. i don't care about overspending. he can't say that three times out loud and have a prayer in 2012. the republicans are going to take the senate in 2012. if you look at the 23 democrat seats up half in reddish states and ten republican senate seats in reasonably republican states with the possible exception of massachusetts and he has $10 million in the bank and looks great in a bathing suit. you are looking at a republican senate in two years. how will he hold on to the white

house if he says he doesn't care about spending. >> the 2010 elections were on two main themes. where are the job, and democrats are going to cut medicare. obama's response to that, let's do stuff that further reduces employment and let's give republicans cover. >> look, there are 50 house republicans saying, we're willing to send the country into default. he just doesn't have the leverage. >> if he just says no. >> we'll talk about jobs and further leverage right after the break where we'll have more with our "roundtable." first, how will tomorrow's market respond to today's news? we get an expert reality check. stay with us. >> announcer: "this week with christiane amanpour" from the newseum in washington, d.c. will continue after this from eum in washingns. .c. will continue after this from our abc stations."

this week, wall street started to waiver with the deadline moving closer. the dow plunged, its biggest drop in a year. the ripple effect stretched to overseas, international markets shaken by the climate of deep uncertainty and confusion, so what will tomorrow ming? mohamed el erian joins me, the ceo of pimco, the world's largest bond fun. thank you for joining me. you've been hearing the senate

majority leader mitch mcconnell is feeling quite optimistic. that things will be worked out. there's a framework of a deal. how do you expect the markets to react come open time today and also tomorrow here? twofrjts ways, christiane, first, i think this compromise will lead to an increase in the debt ceiling, and therefore avoid default. but this relief will be short. and with will be short because markets look at the discussion not as an end in itself, but a means to an end. when they look at a means to an end, it will not remove the threat of a downgrade. it does nothing to restore household and corporate confidence. so unemployment will be high, than would have been otherwise, growth will be lower than otherwise, and inequality will be worse than otherwise, and, thirdly, like you said, the rest of the world is watching, and this will do very little to reduce the concern that the rest

of the world has, about the role of the u.s. and global economy. so i expect the relief to be short-dated. >> let me ask you about the downgrade. there's obviously quite a lot of debate about not only will it happen but if it happens, how dramatically bad would that be for the united states. what, from your perspective would be an effect of a down grade from aaa? it will make us worse off. it's unambiguous in my mind that we've constructed both a global system and national system based on u.s. being a aaa. if the usa loses aaa status, it will be much more difficult for the u.s. to restore growth. it's bad. >> how likely do you think it is to happen, the down grade? >> we have one waiting agency out there that said, it would downgrade, unless certain things happen. and these things are not happening fast enough. so, if this rating agency, s&p, sticks to what it said, it will down grade. of course it's under tremendous pressure not to do so, but it said it would downgrade. >> and in terms of u.s. economic

growth, this first half has been very weak, the first quarter, even down graded, if you like, from the estimate. what will substantial spending cuts do. will it materially improve the outlook for u.s. economic growth? >> no, here i'm with paul. because we have a very weak economy. so with growing more spending at this stage, will make it even weaker, especially that this is not acknowledged in the context of mededm term viability. remember, christiane, public finance is only one of the head winds in this economy. we have a banking system not operating properly, we have a labor market not opeperating properly and a housing market not operating properly. >> all right. thank you so much indeed, mohamed el erian. sobering words as you heard. let's bring you all back for the "roundtable" discussion. the big, overarching theme here is to get the economy back on

track and to improve this really drastically weak recovery. paul, how is that going to happen? >> my first best guess, my won't happen.y estimate, is it not for years and years to come. no one is discussing the kinds of policy that might make it happen. we're waiting for the economy to heal itself, which it's doing very slowlwl >> even in this situation, are there things that could be done to make people go back to work? are there structural infrastructure? >> look, if we -- there are potholes everywhere. if we actually -- you know, if there are any political willingness to just do, sort of obviously needed infrastructure work, with borrowed money, that would do a lot. we'll not do that. other than that, ben bernanke might be able to pull a few more tricks out of his hat. but it's really hard to see where this will come from. >> george, if that happen, and there are all these dramatic turns and the economy doesn't improve, what does that do politically? will people blame the president come 2012 and going to blame the

republicans? what's going to happen? >> i think they'll blame the president. it takes 2.5% growth annually to create enough jobs to account for the natural growth of the labor force. and the numbers we got this week -- the first quarter growth of 1.9% was revised down to 0.4, of 1%. then it came down to 3%. >> listen to mohamed el erian. he is not alone. on the one hand, he said if you don't have the tremendous spending cuts, we'll get down graded by the rating agencies, that's going to be a disaster. >> who are these guys and why do they have this power? they've been wrong about everything. they were wrong about the mortgage market. they downgraded japan in 2002 and the result, after 19 years you would have made a lot of money. >> i agree with that.

but then you turn it arounun but mohamed el erian said if you make the spending cuts the economy will be stuck in the mud. it's a paradox you can't break. >> not a paradox, it's a contradiction. >> the textbook answer is spend now, cut later. spend now and have a long-term problem, work on it later. >> the problem is not in the next decade, but what happens in 2020. if you can promise to do reasonable things after 2020, while at the same time actually spending, it will never happen -- it's politics, there's no economic industry. >> there's short-term progress and long-term progress. short-term, we didn't raise taxes. we are dealing with the overspending problem, clawing it back a little bit. long term, we set the precedent. we're never doing a 1982 or 1990 deal where we raise taxes and cut spending, going to insist, any time the debt ceiling goes up, dollar for dollar, spending comes down.

those are long-term progress. there's a third part to the problem, we think. taxes, spending, there's a wave of regulations that have arrived and that are threatened. i think the biggest thing holding back economic growth is e concern next week you wake up, or e.p.a. or some other department decided not what kind of light bulbs you have, but how big the car can be. >> the amazing story that comes to mind, the tax hikes of '82, and '83, which is a terrible thing. by the year 2000, we had a decade of very good growth. all of the squandering took place after that. the things you said we will never again do. it will be things that put us briefly on the road to fiscal sanity. >> gentlemen, thank you very much indeed. coming up, the next big story. is the face of terror changing? should the massacre in norway be a wake-up call for law enforcement here in the united states? i'll ask new york city police commissioner ray kelly. united states? i'll ask new york city police commissioner ray kelly.

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two troubling cases spotlight the threat posed the exexemists in texas, the army captain planned another deadly attack on ft. hood and in norway. he may have been inspired by anwa al mari. and in norway. confessed mass murder has found unlikely defenders on the far right of the european political spectrum. at least three politics have come under fire for defending his extremist, antntmuslim, anti-immigrant views but is violent right-wing extremism only a threat abroad? for some perspective we turn to a man on the front lines, new york city police commissioner, ray kelly. thank you for joining us. >> good morning. >> we heard all of the work, law enforcement is doing on islamic extremism home-grown terrorism threat. is there a possibility that a

norway could happen here? >> it's something that we have to watch closely and we are. u.s. law enforcement is focused on the issue. i can tell you, in new york city, we have a task force in our intelligence division that looks at white supremacist/anti-government groups and individuals. in fact, just a few days before the norway massacre, we had a teleconference with our century partners, this is 100 law enforcement agencies in the northeast quadrant of the country and that was the specific subject. we talked about certain groups and individuals we are concerned about. it's an issue that can pop up. quickly, without any advanced notice. because these individuals, play their cards very closely. they don't show their hand. just a few blocks from where you're sitting, we had a white supremacist walk into a

holocaust museum in 2009 shoot and kill one of the security guards, he himself was shot but clearly he had mayhem in mind. it's a ongoing issue law enforcement hahato focus on and i think we are. >> can you characterize some of the threats and you mentioned one. can you characterize some of the threats that you're hearing about? the nature of them? >> well, there are individuals who get together, and sort of follow a neo-nazi philosophy, and -- not unlike anders breivik in norway, but they are difficult to spot, and to a certain extent, they tend to get together in rural areas. they stay away from large cities. but in new york, we have to be concerned about someone

plotting about an event away from the city, coming into new york. so, we're on the lookout for this sort of thing. but, it's difficult totodentify. >> is it politically difficult as well? there's obviously an infamous case of a special report on this issue, written by an analyst, at the department of homeland security, and because of an outcry, once it was about to be released, it was quashed. is there a problememith trying to focus enough attention on this threat, given the sensitivity about the threat since 9/11, for instance, the islamic threat? >> you know, i guess there are always some first amendment issues that you have to be aware of, but i know -- we don't have a problem focusing on it, in new york city. we follow certain individuals on the internet. they put out their feelings, quite clearly. a lot of them are careful about not advocating violence. for instance, the individual in

norway, although we had a lot of internet activity, did not advocate violence. he put his manifesto on the internet six hours before the attacks. but so, they are -- they are somewhat careful about, you know, advocating violence. >> and just as we wrap up, i wanted to ask you, on this rapidly approaching tenth anniversary of 9/11, is new york, is america safer, or are there real issues that you are still having to deal with? >> there's certainly real issues that we have to deal with. we think the elimination of osama bin laden was an important lestone but not a game-changer. it was still very much at risk. we're concerned, as we get closer to the 9/11, memorial. because we know osama bin laden spoke about that date, twice in the last two-year period. so, the federal government,

local and statatauthorities, are very much aware of the threat, and are on alert. >> commissioner kelly. thank you very much indeed for ining us from new york. >> thank you, christiane. >> and we want to bring you up to date on some other headlines from around the world. israel today is rocked by the largest protest in its history, more than 150,000 people are in the streets around the country, demonstrating against high housing and food costs and inadequate health care and education. police disbursed crowds in tel aviv but there have been no reports of violence. however in neighboring syria, the news is very grim. the associated press, saying 62 civilians are dead. killed after thank tanked the city before dawn. they are stepping up a crackdown on antigovernment protest. this cops a day before the start of the muslim holy month of ramadan where nightly protests across the country are expected to grow larger. and in somalia, it is a race

against time as u.n. relief workers struggle to get help for the nation. the situation is truly a famine born of skyrocketing food prices and exacerbated by the worst drought in decades and perpetuated by terrorists who use food as a weapon. abc's david muir is the first american correspondent in somalia, traveling with the united nations and he filed this report from mogadishu. >> reporter: we flew in to mogadishu with the u.n. this morning. they now say the crisis in somalia is the most series food emergency in the world. and when aid reached the city's capitol. there was something else, a gun battle. african peace-keepers, trying to protect the food, firing deadly shots of islamic militants, members of al shabab, who have a grip on much of this country. this crisis is at a breaking point. tens of thousands are fled the country by foot.

some walking more than 100 miles to kenya, traveling what the u.n. calls the roads of death. we traveled the perilous route too. and then this mother, sitting beneath the tree. she was almost there. >> and how long was her journey? >> reporter: ten days, she tells us. these are all her belongings from somalia? yes, she says. her own children have run ahead to the tents that now pepper the horizon. the first sign these refugees are nearing the camps. the children, who race to keep up with us, their smiles have returned. a number of refugees swelling in the desert outskirts, so many now that the doctors have come to them. >> this is an ambulance? >> reporter: this is an balance? . >> yes. >> reporter: they take us inside their makeshsht clinic. mothers putting their children in hanging buckets to weigh

them. the hunger has now spread here beyond the most susceptible, beyond babies and toddlers, to older children too. they say if they can get the nutrients, you soon see what we did. doctors without borders allowed her camera into their intensive care unit at the refugee camp. we saw this little girl, tiny bones and sagging skin, the hospital director immediately told us, he saw something else. she was sitting up for the first time. she has been here two days. >> this is the third day. >> the third day. and you can say that she's going to be okay? >> yes. >> reporter: christiane, it's something to see how quickly the children bounce back once you feed them, which is why the u.n. said it's imperative to get the food and aid here into the capital of mogadishu. there's are people coming by the tens of thousands, knowing the danger they face in doing so. a sign of how desperate they've

become. we'll be traveling on the convoy today. you can see the torrential downpours will make the whole effort all the more challenging. christiane, back you to. >> be sure to watch "world news tonight" for more of davis's exclusive reporting. viewers of "this week" have given generously to help the people of somalia. as you can see, the challenges are great. to find out how you can help abcnews.com/help. we'll be right back. on a top secret project. it was a challenge that nobody had undertaken before. and we didn't know whether we could do it. when kennedy announced we're going to go to the moon, that was a thrilling proposition.

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they have. last night, i got chinese food and the fortune cookie said i don't have your money. get my money. >> president obama said compromise has become a dirty word. and then he told republicans to go compromise themselves. >> the debt ceiling debate drags on and on and both parties have been acting like children. the republicans saying give me give me, give me. democrats s ying, take it, take it, take it, just don't hit me. >> and we'll be right back. it, just don't hit me. >> and we'll be right back. t. rowe price. invest with confidence.

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rain ♪ ♪s in desert you can remember your name ♪ >> good evening from abc news headquarters in washington. i'm howard k. smith. >> i'm harry reisner in new york, these are tonight's headlines. >> and hideki irabu will pitch out of it. ♪ this week,k,he pentagon did not release any names of u.s. service members killed in iraq or afghanistan, and it's the first time since we began this segment that we did not have to mark the loss of any forces in the u.s. conflict. we'll be right back. rk the loss of any forces in

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that's our program for today. be sure to watch "world news tonight" for all of the latest on the debt ceiling negotiations, remember, follow us any time on twitter, facebook and abcnews.com. for all of us in washington, thank you for watching and we'll see you again next week.

republicans in the white house have reached a tentative deal to end the debt ceiling crisis. and the attorney representing shane bower and josh fatel he expects an iranian court to issue a verdict within a week week. [ female announcer ] they've been off limits to dieters since time began. not anymore. ♪ fiber one is bringing brownies back.